Executives to the Rescue

Once there was a manufacturing executive who was concerned about the inaccurate financial information he was getting, so he moved his desk up to the accounting department so he could figure out what was going on. Soon he found out that about 80% of the way through month end close the accountants calculators’ batteries were dying so any numbers bigger than they could count on their fingers and toes were wrong, so he bought them all rechargeable calculators and the problem was solved.

Now that isn’t a true story, but it is the equivalent of the supposedly true story recounted in CFO Magazine. The story goes that the company had manufacturing problems so the CFO moved his desk to the factory floor.

“A key problem for the company was a high return rate for some products. For example, part of the process for making one product involved cutting 20 foot bars into smaller pieces and punching regularly spaced holes in them. But when the bar was down to the last piece, it tended to move slightly as the hole puncher tried to do its work. Lots of pieces were created with holes that were off by the 1/16th inch of tolerance called for in the engineering specs. ‘You could be an inch and a half off, and no one realized that or tested it,’ Litowotz [the CFO] says.

The simple remedy was creating a jig: a template for metal products similar to a stencil for painting on a wall. In order to make a hole in a bar, it was necessary to punch through a corresponding hole in the jig. The number of returns dropped immediately and dramatically.”

If that’s true the root of the problem was not a lack of jigs, rather an HR process that hired morons. If the people in production were routinely an inch and half out of a +/- 1/16″ spec and didn’t realize it they have much bigger problems than fixtures can resolve.

Don’t get me wrong – the idea of a CFO (or any other senior manager) moving his desk to the shop floor is a great one, but not so he can quickly see the stupid mistakes of the production people and fix them. It isn’t so he can fix and preach – it is so he can learn.

There is certainly value in having an outsider’s perspective – someone to ask the dumb, obvious questions – to point out the 800 pound gorilla in the living room who has been there for so long we ignore and work around it. But 999 times out of a thousand there is a very good reason for the gorilla to be there. Everyone knows it and it is still there because lots of good people have burned lots of brain cells trying to get it out of the living room and came up empty. The likelihood of anyone – especially an exec with little or no technical knowledge – going out to the floor and quickly solving the big problems through his superior powers of observation, logic and intellect are virtually non-existant.

The lack of respect and humility the CFO article exudes is stunning, but sadly, not all that uncommon. It is the top down mentality driven by an unshakable conviction that the people in management are simply smarter than the people doing the work; and problems are best solved by having those smarter people go out and straighten things out … then write a policy to make sure the dummies don’t screw things up again.

A far more likely scenario is fo the CFO to go out into the factory and find out that everyone on the floor knows the cause and the cure for the defect, but they cannot get past the budget restrictions and the financial justification hurdles necessary to get the jig made. The lack of common sense is not on the factory floor so much as it is in the management processes.

When senior people go to the gemba – the factory floor – any quick fixes they can contribute are most apt to be to learn how management can improve in order to enable the people doing the work to be more successful.

The title of the article: What Holds CFO’s Back From Operational Roles? The answer more often than not: Ignorance, arrogance, a lack of respect for the deep knowledge held by people on the cutting edge of the value adding effort. Managers must go to the gemba, but they have to go there with the mindset of a freshman walking into his first day of engineering school – excited but struck with a profound sense of how much he has to learn.

Comments

Excellent article. A lot of times, senior managers are terminated due to their inability to reach goals of; profitability, customer complaints, efficiency, etc. and it is soley based on numbers/scorecards/budget attainment. it is rare to hear of an executive being engaged at that level of problem solving within the facility and getting a hands on resolution.

Good article Bill but it raises something that irritates me. Is that not exactly how we treat our customers? We try to manipulate them through a sales funnel and uncovering their needs which so happens to be our product or service?

We always talk about the lack of respect for employees on the shop floor. Seldom do we view Lean as lacking respect for the customer. Which in my thinking is a bigger problem.

Great piece I actually went to CFO website and read the whole article, it is nothing more than a buy from me because I am a genius self serving load of bull manure (sorry for the language but the article deserves it). Marlon also got it right as did Joseph in fact I doubt he gives a damn about customers or other staff by the way he wrote the piece, and from the look none of his employers ever cared either.

All the guy talked about is two companies so pathetically run that any half wit could have stepped into a senior role and help fix the problems. What I doubt he pointed out or admitted was what createed the problems in the first place, in other words there was no root cause analysis.

For the company stamping parts something was seriously wrong either they hired nothing but cheap bodies with a pulse or were run by numbers that put the focus on making parts not good parts.

As far as his computer software example he never really solved its root cause either, just ignore features isn’t a solution in software. Either they had features no one needed thus they were a waste in the first place, or they had other problems. Those other problems are either unrealistic schedules, or too few people to get all the required work done on time, he never addressed either.

It does reveal one thing that companies that are run by the numbers are rarely very good at anything. To many numbers to track that only ever tell you what happened in the past and the past is the past whether it was yesterday or 20 years ago. If you want to solve problems that are in the present you have to actually look at what is going on, and you have to empower enough people in an organization to deal with the present so that you can fix problems so they do not negatively impact the future.

The article is nothing more than trying to justify CFOs and other executives, when the truth is that its is their lame attempts at control a business that resulted in useless counter productive controls. In fact I would bet all he did was take credit for other peoples ideas and suggestions. Lets be honest he is a hustler trying to sell software that may or may not actually be worth anything and he was trying to make the impression he was smarter than average, which in reality just sets off those of us that spent our lives working in the dirty areas were value really is created.

A very odd article…almost solipsistic. Where were the other executives in the company?…say, the VP of Manufacturing? Wouldn’t a CFO who was concerned about price to cost ratio normally first talk to his peers who were responsible for (a)the cost, and (b)the pricing, before diving into this deep of a level of detail?